Consumers Less Upbeat as Summer Winds Down

consumer sentiment economy home buying interest rates stocks investing
David Duprey/AP
By Steven C. Johnson

NEW YORK -- U.S. consumers, bracing for higher interest rates and slightly slower economic growth, were a bit less optimistic in August as sentiment retreated from last month's six-year high, a survey released Friday showed.

The Thomson Reuters/University of Michigan's preliminary reading on the overall index on consumer sentiment slipped to 80.0 from 85.1 in July, the highest since July 2007.

August's result was the lowest in four months and well below the 85.5 reading expected by economists.


Consumers' view of current economic conditions showed the biggest decline, and most expected the pace of growth to ease slightly. However, these changes weren't large enough to upend "the prevailing view that the economic expansion will continue," survey director Richard Curtin said in a statement.

"Perhaps the most important recent changes have been the increase in home values as well as the jump in the numbers that expect interest rate increases during the year ahead," he added.

Long-term interest rates have risen by more than a full percentage point over the last three months on the view that the Federal Reserve will start scaling back as soon as next month its hefty support for the economy.

That has pushed up mortgage rates, which could sap some of the strength from a housing recovery that has been pushing prices higher for more than a year.

On Thursday, wary investors sold both stocks and bonds in expectation of higher rates, sending benchmark 10-year Treasury yields to a two-year high above 2.8 percent.

The survey's barometer of current economic conditions fell to 91.0 from 98.6. The gauge of consumer expectations slipped to 72.9 from 76.5.

Upper-income households said they anticipated slightly slower income gains in the year ahead due to future inflation, according to the survey.

However, the medium- and long-term inflation outlook overall held steady, with the one-year inflation expectation stable at 3.1 percent and the five-to-10-year inflation outlook unchanged at 2.8 percent.


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mgh406

It is no mystery as to why consumer are spending less. If any of the wall street people had to run a family budget they would see clearly why Many want to blame it on the end of the TEMPORARY withholding reduction. The fact is the price of everything is creaping up daily and disposable income is declining. .

August 16 2013 at 1:49 PM Report abuse +1 rate up rate down Reply